Draxlmaier likely to close Romanian plants

German producer Draxlmaier, the biggest employer in the domestic automotive industry, has announced that in the wake of the worsening international economic environment and shrinking orders that it could resort to a temporary shutdown of its Romanian plants, over the same period the main customers will freeze car production.

Draxlmaier, with around 17,500 employees in Romania, owns five plants domestically, each of them having a West-European car producer as the main customer. “(…) To offset this reduction in activity, the company is coming up with a solution package to adjust production schedules,” in line with company data. The first facility to be hurt is the second plant the German group built in Romania, Rolem plant in Codlea, Brasov county. The company’s representatives announced the situation of contracts for 2009 points to a production reduction of around 60%, to be partly covered by new orders to be fulfilled on a higher automation degree. As a result, Draxlmaier will cut the headcount in the Codlea plant by 1,000 people without transferring them to other production facilities. At present, Rolem Codlea employs around 2,000 people. The Codlea plant produces car interior parts for all Draxlmaier’s clients. Similar moves are likely to be made in the following period for the other Romanian plants of the company. “At the moment, we have no details on how long customers’ production halts will last. Should this situation maintain, layoffs are inevitable,” said Ferdinand Zilcher, general manager of Draxlmaier in Romania. He added the operations of the five plants could be adjusted in the following period. “(…) It’s important the Finance Ministry make a decision on VAT reimbursement. This tax issue may have an impact over domestic plants at the moment production volumes for each centre are recalculated,” said Zilcher. According to the released data, the company has to get a reimbursement of around 3.3m euros. As regards domestic 2008 turnover, Draxlmaier has not changed projections depending on the financial crisis. At the beginning of this year, the company estimated a moderate advance to 180 million euros, after in 2007 the five plants generated cumulated turnover worth 176 million euros.